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Scott Sumner: September 2014

An Author Archive by Month (18 entries)

Flying blind

Monetary Policy
Scott Sumner
There is a sort of zero sum aspect to exchange rates. Any change in exchange rates means one currency is weaker and one is stronger, relative to the other. But exchange rates tell us nothing about whether currencies are weaker... MORE

Don't jump to conclusions (markets are smarter than you or I)

Central Planning vs. Local Knowledge
Scott Sumner
Many pundits, especially highly intelligent liberal pundits, often fall into the trap (fatal conceit?) of assuming that because they can't explain why the market would do something, the market must be wrong. But markets are almost infinitely subtle. A commenter... MORE

What kind of Great Stagnation?

Macroeconomics
Scott Sumner
Paul Krugman likes to mock extremely talented conservative economists every time they make a statement that seems inconsistent with the textbook AS/AD model of demand shock-created recessions. And yet as far as I can tell, the views of people like... MORE

Commenter Fed up directed me to an article at Yahoo discussing the squeeze on the middle class: A survey by Pew this year found that 57 percent of Americans felt their income was trailing the cost of living -- the... MORE

Canadian success

Cross-country Comparisons
Scott Sumner
David Henderson has a very good post on the Canadian economy.  David argues that austerity can be expansionary, and points to the example of Canada in the 1990s. Josh Barro counters that Canada was aided by an expansionary monetary policy:... MORE

The Key to victory: Run against Piketty-nomics

Politics and Economics
Scott Sumner
This is good news: New Zealand's NZX 50 Index increased 1.1 percent, driven higher by power-company stocks, after John Key won a third term as prime minister. Key, a former head of foreign exchange at Merrill Lynch & Co., led... MORE

Bill Woolsey directed me to a post by Kevin Grier (commenting on Lars Christensen): OK, so the first graph is the path of Nominal income (PY) relative to trend. The second is the path of real income (Y) and the... MORE

You often read very thoughtful progressives explain why the government sector in the US is too small. You'd think 40% of GDP would be enough, but they insist we have "unmet needs" for a single-payer health care system (18% of... MORE

Inequality in education

Economics of Education
Scott Sumner
Because I'm a resident of Newton, Massachusetts, I couldn't help noticing that it was recently named the Best Suburb in America for education. And it's easy to see why: That's largely because this wealthy Boston suburb has the money to... MORE

This is beginning to sound like a broken record. A reformist right-wing government does lots of good things, trimming the size of the public sector. It promises monetary stability but delivers instability---a contractionary monetary shock. This time it was in... MORE

Ending slavery made America richer

Growth: Causal Factors
Scott Sumner
Matt Yglesias has a good post that goes right at the "smiley-face" view of early US history--that we were a great country save for the regrettable aberration of slavery. He doesn't pull any punches: Specifically, white Americans conquered a vast... MORE

The Closing of the Liberal Mind (pt. 2)

Labor Market
Scott Sumner
A few weeks ago I did a post pointing out that pundits on both the left and the right have moved further to the extremes, and away from sensible policy views. I just noticed another example today, an article... MORE

Lorenzo on the opponents of neoliberalism

Political Economy
Scott Sumner
Over at TheMoneyIllusion I occasionally recommend that people look at the the excellent posts done by Lorenzo. His essays tend to be relatively long, but well worth reading in full. His newest post exposes the ignorance and ideological bias that... MORE

This has to be one of the most amusing things I've read all year: The problem comes from believing that QE is some magic growth elixir. The world's Keynesians have convinced themselves that the U.S. is now growing faster than... MORE

Is deflation bad?

Macroeconomics
Scott Sumner
Here's David Andolfatto: Everyone knows that deflation is bad. Bad, bad, bad. Why is it bad? Well, we learned it in school. We learned it from the pundits on the news. The Great Depression. Japan. What, are you crazy? It's... MORE

Never reason from a wage change

Macroeconomics
Scott Sumner
Bryan Caplan has a post showing that Janet Yellen is one of the sensible Keynesians, who understands the problems caused by sticky wages. Here's the Washington Post discussing Yellen's views: The stagnation in wages despite a pickup in hiring over... MORE

Four things I believe

Monetary Policy
Scott Sumner
Here are four things I strongly believe to be true: 1. The Great Recession was caused by tight money at the Fed, and other major central banks. Period. End of Story. 2. Fed policy almost never strays far from the... MORE

Predicting bubbles

Finance
Scott Sumner
MaynardGKeynes recently left this comment: Simple fact is that Shiller correctly predicted 3 of the last 3 bubbles (2000, housing, 2007). That's a widely held view, but is it correct? This is from Eugene Fama's Nobel Prize lecture (in the... MORE

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